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I noticed that my Vanguard target date mutual fund (VFIFX) is basically just a collection of positions in other Vanguard mutual funds. For this, they charge a 0.08% fee. Seems cheap enough, but… The inner mutual funds (like domestic and international total markets, bonds, etc) also have their own fee. Are all these fees captured in the top level fund? Seems like some of the underlying funds have fees greater than the advertised 0.08% in the top level fund.
1) by sec regulation, all "fund of funds" like this need to include underlying fund fees in its fees 2) this fund does not charge extra on top of the underlying fees, it really is just the underlying fees. The only catch is they haven't picked the absolute lowest share class for all the underlying funds, which results in this 0.08% rate
Thanks, that makes a lot of sense. For a minute there I thought my 401K was being double charged for the convenience of automated rebalancing. In the case of robo-traders though (for taxable accounts), I assume the brokerage fee is on top of any fund fees?
Yes because the robotrader is charging a management fee - it itself is not a fund
this sounds like a great question to ask a Vanguard rep.